Appeal success: Interest on late tax filing starts from notice date, not return filing date.

The Tribunal partially allowed the appeal challenging the imposition of interest under Section 234A for late filing of income tax return. It held that interest should be charged from the date of notice under Section 148, not from the return filing date or its due date. The Explanation under Section 234A(1) was considered, stating that assessments under Section 147 are regular assessments. The Tribunal's decision aligned with a ruling of the Hon'ble Bombay High Court, resulting in interest being charged from the notice date under Section 148.

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Issues involved:
The appeal challenges the order passed by the Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2015-16, specifically regarding the imposition of interest under Section 234A for late filing of return of income.

Details of the Judgment:

Issue 1: Invocation of provisions of Section 234A and imposition of interest
The assessee contended that the imposition of interest under Section 234A for late filing of return of income was illegal, unlawful, and against the principles of natural justice. The CIT(A) upheld the invocation of Section 234A without providing an opportunity of hearing, leading to a violation of principles of natural justice. The assessee argued that no mention of charging interest under Section 234A was made in the assessment order or any notices. The Ld. A.R. submitted that the provisions of Section 234A were incorrectly applied as they are meant for returns filed under Section 139(1), whereas the return in question was filed in response to Section 148.

Issue 2: Applicability of Section 234A to the case
The Ld. A.R. further contended that the assessee should not be charged interest for the period during which no return of income was filed, i.e., after the due date under Section 139(1) to the notice under Section 148. The argument was that there is no mechanism in the law allowing the assessee to file a return after the due date under Section 139(1) and be asked to pay interest for that period.

Conclusion:
After considering the arguments from both parties, the Tribunal noted that Section 234A mandates the payment of interest for late filing of returns. The Explanation under Section 234A(1) clarifies that assessments made for the first time under Section 147 are considered regular assessments. Citing a decision of the Hon'ble Bombay High Court, the Tribunal emphasized that interest should be charged from the date of the notice under Section 148, not from the date of return filed under Section 139 or its due date. Consequently, the appeal was partly allowed, and the interest under Section 234A was to be charged from the date of the notice under Section 148.

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